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Apple and publisher pals hold up US and EU watchdogs

Firms wriggle over ebook price-fixing probe settlement

By Brid-Aine Parnell, 5 Apr 2012

Apple and two major publishing houses are holding out on settling the ebook price-fixing investigations from the US and Europe.

While Simon & Schuster, HarperCollins and Hachette Book Group are all keen to reach an agreement with regulators in the US and EU, Penguin, Macmillan and Apple are all reluctant to shake hands on the terms sought, people familiar with the matter let slip to the Wall Street Journal.

If the US Department of Justice regulators and officials from the EU's antitrust division can't reach a deal with the companies – or if they're not happy with just getting a few firms to sign on – it's likely that the current probes will turn into official investigations, or even antitrust lawsuits.

Apple and the five publishers are in trouble over allegations that they decided in concert to fix the price of ebooks by signing contracts that moved the ebook market into an agency pricing model - where publishers set the price and take a 30 per cent cut - and added so-called favourite nation clauses, thus preventing the publishers from selling more cheaply to anyone else.

All the companies face massive fines and damages in civil lawsuits if the regulators find the lot of them guilty.

Last month, European Commissioner for Competition Joaquin Almunia said that the possibility of a settlement was only open if publishers were willing to address all of the regulators' objections.

The settlements would likely force Apple and the book-houses to abandon their contracts and return to the wholesale pricing model, where sellers pay publishers a set cost and are then free to price the book however they see fit.

Apple and the publishers didn't like that model for ebooks because Amazon was selling books cheaply or even at a loss in order to promote sales of its Kindle ereaders. ®